Taiwan's manufacturing sector showed signs of recovery in March, according to the Taiwan Institute of Economic Research (TIER) on Thursday. The manufacturing business cycle signal increased by 3.32 points to 14.20, shifting from a "sluggish" yellow-blue light to a "stable" green light.

According to the institute, this improvement was largely due to factories resuming operations after the Lunar New Year and an increase in inventory restocking. Associate researcher Hsu Pi-shu (許碧書) stated, "Following the Lunar New Year, manufacturers resumed operations and restocked inventory, while geopolitical uncertainties boosted the willingness to build up supplies. Year-on-year growth was significant in import-export figures, export orders, and the production index, with the manufacturing production index reaching a historic high.”

Looking ahead, TIER indicated that the expansion of high-performance computing and AI applications, along with rising semiconductor capital expenditure, will continue to support key industries. However, risks remain, particularly from conflicts in the Middle East and potential energy supply disruptions, especially in the Hormuz Strait, which could increase oil prices and impact global costs.

TIER also flagged ongoing U.S. tariff policies and weak domestic demand in China as additional challenges. Nevertheless, it noted that Taiwan's AI-driven growth momentum is expected to persist, pending close monitoring of global developments.